Stocks and Bonds Alone Can No Longer Diversify Your Portfolio — But This Is What's Coming to the Rescue

An orange life ring floating in a swimming pool.

For two generations, American investors lived by one rule that seemed to work across market conditions: Own stocks for growth, own bonds for safety, and let the two balance each other out.

The 60/40 portfolio became the default for retirement savings because, when stocks fell, bonds were supposed to rise and soften the blow.